Twelve Of The Biggest Deals in the Handmade Cigar Industry (Updated to 13)
Britain’s Imperial Brands PLC sold its premium cigar unit October 2020 for 1.225 billion euros ($1.44 billion), a heady sum indeed. But it’s only one of many impressive acquisitions from the modern history of the cigar business. Here are the biggest deals in the handmade cigar business, beginning in 1984 and running through 2020, listed in ascending order of value, from $40 million to more than $20 billion.
Scandinavian Tobacco Group Merges With Swedish Match AB: $40 million
The 2010 merger between the parent companies of Macanudo and CAO created a European tobacco giant with annual sales of nearly 700 million euros (worth $1 billion at the time) and 10,000 employees.
The merger between Scandinavian Tobacco Group (STG) of Denmark and Swedish Match AB of Sweden resulted in a 30 million euro ($40 million) payment from STG to Swedish Match, and STG ended up in control, with 51 percent ownership.
Tabacalera Acquires Max Rohr, Owner of Romeo y Julieta: $53 million
When Spain’s Tabacalera S.A. (now a part of Imperial Brands) took an interest in the U.S. cigar market, it went on an acquisition spree. The first deal was this one, a buyout of Max Rohr Importers Inc. for $53 million in cash, which began in the summer of 1997 and was complete by the new year.
Max Rohr was a small company, but it owned something special: the U.S. distribution rights to the Romeo y Julieta brand, along with Gispert, Saint Luis Rey, Juan Lopez and Quintero. Today, Romeo is the best-selling brand in the U.S. for Tabacalera, which would merge with French tobacco giant SEITA in 1999, creating Altadis S.A.
Scandinavian Tobacco Group Acquires Thompson: $62 million
In 2018, Scandinavian Tobacco Group (STG) bolstered its already robust U.S. retail business by acquiring catalog and Internet retailer Thompson and Co. for $62 million in cash. STG already owned Cigars International, the leader in the segment. Thompson, founded in 1915, claimed to be the oldest mail-order cigar company in the United States.
General Acquires Villazon: $81.4 Million
In the thick of the 1990s cigar boom, General Cigar Co. forged a deal that combined its considerable library of Dominican cigar brands with two of the cigar world’s biggest Honduran brands, Punch and Hoyo de Monterrey, by acquiring Villazon & Co. Inc. for $81.4 million in 1996. It was a huge sum at the time. General not only acquired Punch and Hoyo, but it got more production, namely the Honduras American Tabaco S.A. (HATSA) factory, which at the time consisted of two factories in Honduras that rolled cigars.
Ron Perelman Acquires Consolidated (Twice): $118 Million and $188 million
In July 1984, billionaire investor Ronald O. Perelman (of Revlon fame) acquired Consolidated Cigar Corp. for $118 million. He sold the business back to its management team in 1988 for $138 million, then reacquired it in 1993 for $188 million. It proved to be a good deal for Perelman, who later took it public, then sold it to SEITA for a considerable profit. See below.
Swedish Match Acquires Majority Stake In General Cigar: Approximately $170 Million
When Swedish Match AB of Stockholm, Sweden, invested approximately $170 million in 2000 to acquire 64 percent of General Cigar, it marked a turning point in General Cigar’s history. General had been managed by the Cullman family since 1961, and while they continued to run General after this deal, five years later Swedish Match exercised an option to acquire the remaining chunk of the company.
Swedish Match Acquires UST Cigar Sales Inc.: $200 Million
The valuation on this April 2004 deal is quite unusual because the money was paid by the seller, rather than the buyer. In 2002, a U.S. unit of Swedish Match sued UST over pricing issues in its smokeless tobacco business. As a settlement, UST gave Swedish Match its cigar unit—which made such brands as Helix, Astral and Don Tomás—plus $200 million in cash.
Tabacalera S.A. Acquires Central American Cigar Factories & Havatampa Inc.: $314 million
While the machine-made giant Havatampa Inc. represented the lion’s share of this all-cash deal, Spain’s Tabacalera paid a pretty penny to acquire two cigar factories from the Plasencia family in 1997. The factories, one in Danlí, Honduras and the other in Ocotal, Nicaragua, gave Tabacalera the immediate capacity to make cigars for the U.S., which was in the midst of a cigar boom.
Altadis S.A. Buys Half of Habanos S.A.: $477 Million
The cigar industry certainly took notice when Altadis S.A. acquired half of Cuba’s Habanos S.A. for nearly $500 million in 2000. Habanos is the state-run company that controls all of Cuba’s cigar exports.
SEITA Buys Consolidated Cigar Corp.: $733 Million
In 1999, Consolidated Cigar changed hands yet again, with this acquisition by France’s SEITA for $733 million in cash and assumption of debt. At the time, Consolidated had sales of $299 million, nearly all of it in the U.S. market.
Imperial Sells Premium Cigar Business: $1.44 Billion
In October 2020, in the midst of the Coronavirus pandemic, Britain’s Imperial Brands PLC sold its premium cigar business to an investment consortium for 1.225 billion euros ($1.44 billion). The sale includes 50 percent of Cuba’s Habanos S.A., as well as the company that makes and markets a treasure trove of non-Cuban cigar brands for the U.S. market such as Montecristo, Romeo y Julieta and H. Upmann, a pair of cigar factories, including one that’s considered the world’s largest, and JR Cigars, one of the world’s biggest cigar retail chains. The sale does not include Imperial’s machine-made cigar division.
SEITA and Tabacalera Merge, Creating Altadis S.A.: $3.3 Billion
In November 1999, Cigar Insider’s front page declared “Merger to Create World’s Largest Cigar Company.” Spain’s Tabacalera S.A., then a $7.7 billion company, was merging with France’s SEITA, which had sales of $3.2 billion. Combined the two would make more than three billion cigars a year, and claim nearly 25 percent of the global cigar market, by their estimates.
Imperial Tobacco Acquires Altadis: $22.4 Billion
In July 2007, Imperial Tobacco PLC (today known as Imperial Brands PLC) agreed to acquire Altadis S.A. for 16.2 billion euros, worth $22.4 billion at the time.